The Bankruptcy Code provides that a loan may NOT be subjected to a Cramdown if it is secured only by an interest in "real property" that is the Debtor's "principal residence." (See 11 U.S.C. § 1322(b)(2)). In 2005, the Bankruptcy Abuse Prevention and Consumer Protection Act ("BAPCPA") took effect which included a provision expanding the definition of a Debtor's "principal residence" to include mobile homes. (See 11 U.S.C. § 101(13A)). This case arose shortly after the BAPCPA took effect.
The bank, which made the Mobile Home Loan at issue in this case, argued that its loan could not be modified because it was secured by a Mobile Home and the definition of a "principal residence" had been modified to include Mobile Homes. Greg argued the change in the definition of a "principal residence" did not change the definition of "real property" and the Mobile Home Loan could be modified because a mobile home is personal rather than real property.
The Bankruptcy Court ruled for the bank and Greg appealed the case to the United State Court of Appeals for the Sixth Circuit. The Sixth Circuit reversed the Bankruptcy Court and ruled in Greg's Client's favor. Specifically, the Sixth Circuit Court of Appeals held that the change in the definition of "principal residence" did not change the modification of a Mobile Home Loan where the mobile home constituted personal property under applicable state law.